Vontier Reports Second Quarter 2024 Results and Updates Full Year Outlook

Rhea-AI Summary

Vontier (NYSE: VNT) reported its Q2 2024 results, showing a 9% decline in sales to $696.4 million and a 3% decline in core sales. The company's GAAP diluted net EPS was $0.45, while adjusted diluted net EPS was $0.63. Operating cash flow was $46 million, with adjusted free cash flow at $26 million. Vontier has lowered its full-year 2024 outlook and initiated Q3 2024 guidance. The company also announced plans for an Accelerated Share Repurchase Plan.

Segment-wise, Environmental & Fueling Solutions saw an 8% decline in reported sales, Mobility Technologies experienced a 1% decline, and Repair Solutions reported a 5% decrease. The company attributes these results to delayed customer projects, reduced discretionary spending, and macroeconomic pressures.

Positive

• Announced intent to execute Accelerated Share Repurchase Plan
• Repurchased ~$38 million in shares during Q2 (~$60 million year-to-date)
• Repaid $50 million in debt during the quarter
• Net leverage ratio ended Q2 at 2.7x

Negative

• Sales declined 9% year-over-year to $696.4 million
• Core sales declined 3% due to timing issues and macroeconomic pressures
• Operating profit declined 5% from the prior year
• Lowered full-year 2024 outlook
• Q3 2024 guidance projects potential core sales decline of up to 2%

Insights

Financial Analyst

Vontier's Q2 2024 results paint a challenging picture for the company. Sales declined 9% year-over-year to $696.4 million, with core sales dropping 3%. This underperformance is primarily attributed to timing issues in order and shipment delays, as well as macroeconomic pressures affecting various segments.

The company's profitability metrics show mixed results. While operating profit margin increased slightly by 60 basis points to 16.4%, the adjusted operating profit margin decreased by 60 basis points to 20.3%. This suggests that while the company is managing its core operations effectively, it's facing challenges in maintaining its adjusted profitability.

Of particular concern is the lowered full-year 2024 outlook, indicating that management expects these challenges to persist. The new guidance projects total sales between $2.9 billion and $3 billion, with core sales growth ranging from -1% to +3%. This downward revision suggests a more cautious stance on market conditions for the remainder of the year.

On a positive note, Vontier's financial position remains relatively strong. The company repurchased $38 million in shares during the quarter and repaid $50 million in debt, demonstrating a commitment to shareholder returns and balance sheet management. The net leverage ratio of 2.7x at the end of Q2 is manageable, though investors should monitor this metric closely given the challenging operating environment.

Overall, while Vontier faces near-term headwinds, its strategic positioning in mobility ecosystem technologies and focus on connected mobility solutions could provide long-term growth opportunities. However, investors should remain cautious given the current macroeconomic uncertainties and the company's reduced outlook.

Market Research Analyst

Vontier's Q2 2024 results reveal significant challenges across its business segments, reflecting broader market trends and economic pressures. The Environmental & Fueling Solutions segment saw an 8% decline in reported sales and a 5% drop in core sales, primarily due to shipment delays affecting North American dispenser sales. This suggests potential supply chain issues or customer hesitancy in making large capital investments.

The Mobility Technologies segment showed resilience with a slight 1% increase in core sales, driven by demand for convenience store solutions. However, the decline in car wash technologies demand indicates a possible shift in consumer behavior or reduced business investment in this area.

Most concerning is the Repair Solutions segment, which experienced a 5% decline in both reported and core sales. This downturn, attributed to reduced discretionary spending among service technicians, could be an early indicator of broader economic stress affecting small businesses and individual professionals in the automotive sector.

The company's decision to lower its full-year outlook suggests that these challenges are not merely temporary setbacks but part of a more prolonged market slowdown. The projected core sales growth range of -1% to +3% for the full year indicates significant uncertainty in the market.

Vontier's announcement of an Accelerated Share Repurchase Plan, while potentially supporting share price in the short term, may raise questions about the best use of capital in a challenging market environment. Investors should closely monitor whether this strategy aligns with long-term value creation, especially given the reduced outlook and ongoing market pressures.

• Sales of $696 million, down 9% vs. prior year; Core sales declined 3%
• GAAP diluted net EPS of $0.45; Adjusted diluted net EPS of $0.63
• Operating cash flow was $46 million; Adjusted free cash flow was $26 million, representing 27% Adjusted free cash flow conversion
• Lowers full year 2024 outlook, and initiates Q3 2024 guidance
• Announces intent to execute Accelerated Share Repurchase Plan

RALEIGH, N.C.--(BUSINESS WIRE)-- Vontier Corporation (NYSE: VNT), a leading global provider of critical technologies and solutions to connect, manage and scale the mobility ecosystem, today announced results for the second quarter ended June 28, 2024.

Reported sales in the second quarter declined 9% year-over-year to $696.4 million, reflecting the absence of sales from divested businesses. Core sales declined 3% due to the timing of order and shipment delays within the Environmental and Fueling segment and Alternative Energy business, as well as the impact of ongoing macroeconomic pressures on the Repair Solutions segment. Operating profit of $114.1 million declined 5% from the prior year, and operating profit margin increased approximately 60 basis points, to 16.4%. Adjusted operating profit of $141.6 million declined 12% from the prior year and adjusted operating profit margin decreased approximately 60 basis points, to 20.3%. Net earnings were $70.1 million, and adjusted net earnings were $97.6 million, resulting in GAAP diluted net earnings per share of $0.45 and adjusted diluted net earnings per share of $0.63.

“Second quarter results were below our expectations,” said Mark Morelli, President and Chief Executive Officer. “Delayed customer project timing and reduced discretionary spending, impacted sales at the tail-end of the quarter. Our teams responded well, recovering a large part of the revenue shortfall in the month of July.”

“Given the current macro environment, we are lowering our 2024 outlook to reflect slower market growth in the second half,” Morelli continued. “Despite these short-term headwinds, we remain confident in our strategic positioning. Our portfolio is well-aligned in attractive end markets with strong secular tailwinds. Our Connected Mobility strategy enables us a competitive advantage to deliver differentiated value propositions, drive long-term customer success and unlock shareholder value.”

Segment Results

Q2 2024 Segment Results Summary
		Environmental & Fueling Solutions		Mobility Technologies(a)		Repair Solutions		Total Vontier
Sales ($M)		$311.2		$237.6		$150.8		$696.4
Segment Operating Profit ($M)		$89.3		$41.2		$32.1		$162.6
Segment Operating Profit %		28.7%		17.3%		21.3%		23.3%
(a) Includes $3.2 million of intersegment sales that are eliminated in consolidation.

Environmental & Fueling Solutions reported sales declined 8% from the prior year. Core sales declined 5%, impacted by shipment delays which resulted in a decline in North America dispenser sales, offset in part by continued growth in aftermarket service offerings, and environmental solutions. Segment operating profit declined 6% from the prior year. Segment operating profit margin expanded 60 basis points resulting from positive price contribution and ongoing productivity savings.

Mobility Technologies reported sales declined 1% from the prior year. Core sales increased 1% year-over-year, as continued demand for convenience store enterprise productivity and payment solutions was offset by lower demand for car wash technologies, as anticipated, and shipment delays at alternative energy fueling solutions. Segment operating profit margin declined 140 basis points year-over-year, the result of higher R&D investments at Invenco by GVR and unfavorable mix.

Repair Solutions reported sales declined 5% from the prior year. Core sales also declined 5%, as a reduction in discretionary spending among service technicians, driven by current macroeconomic conditions, impacted sales on large ticket items including tool storage, and hardlines. Segment operating profit margin declined 500 basis points, on lower volumes and the timing of bad debt reserves.

Other Items

• Repurchased ~$38 million, or ~0.9 million shares during the quarter (~$60 million year-to-date)
• Repaid $50 million in debt during the quarter; Retired 2024 loan maturity
• Net leverage ratio ended Q2 at 2.7x

2024 Outlook

• Total sales $2,900 to $3,000 million; Core sales (1%) to +3%
• Adjusted operating profit margin flat to up 50 basis points year-over-year
• Adjusted diluted net earnings per share in the range of $2.80 to $3.00
• Adjusted free cash flow conversion of ~90%

Q3 2024 Outlook

• Total sales $715 to $740 million; Core sales (2%) to +2%
• Adjusted operating profit margin down 80 to 110 basis points year-over-year
• Adjusted diluted net earnings per share in the range of $0.67 to $0.71

Conference Call Details

Vontier will discuss results and outlook during its quarterly investor conference call today starting at 8:30 a.m. ET. The call and an accompanying slide presentation will be webcast on the “Investors” section of Vontier’s website, www.vontier.com, under “Events & Presentations.” A replay of the webcast will be available at the same location shortly after the conclusion of the presentation.

The call can be accessed via webcast or by dialing +1 800-549-8228, along with the conference ID: 92715. A replay of the webcast will be available at the same location shortly after the conclusion of the presentation, or by dialing +1 888-660-6264, conference ID: 92715 and passcode 92715 or under the “Investors” section of the Vontier website under “Events & Presentations.”

ABOUT VONTIER

Vontier (NYSE: VNT) is a global industrial technology company uniting productivity, automation and multi-energy technologies to meet the needs of a rapidly evolving, more connected mobility ecosystem. Leveraging leading market positions, decades of domain expertise and unparalleled portfolio breadth, Vontier enables the way the world moves – delivering smart, safe and sustainable solutions to our customers and the planet. Vontier has a culture of continuous improvement and innovation built upon the foundation of the Vontier Business System and embraced by colleagues worldwide. Additional information about Vontier is available on the Company’s website at www.vontier.com.

NON-GAAP FINANCIAL MEASURES

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also references “core sales growth,” “adjusted operating profit,” “adjusted operating profit margin,” “segment operating profit,” “segment operating profit margin,” “adjusted net earnings,” “adjusted diluted net earnings per share,” “free cash flow,” “adjusted free cash flow”, “adjusted free cash flow conversion”, “EBITDA”, “adjusted EBITDA” and “net leverage ratio” which are non-GAAP financial measures. The reasons why we believe these measures, when used in conjunction with the GAAP financial measures, provide useful information to investors, how management uses such non-GAAP financial measures, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures are included in the supplemental reconciliation schedule attached. The non-GAAP financial measures should not be considered in isolation or as a substitute for the GAAP financial measures, but should instead be read in conjunction with the GAAP financial measures. The non-GAAP financial measures used by Vontier in this release may be different from similarly-titled non-GAAP measures used by other companies.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to statements regarding Vontier Corporation’s (the “Company’s”) business and acquisition opportunities and anticipated earnings, and any other statements identified by their use of words like “anticipate,” “expect,” “believe,” “outlook,” “guidance,” or “will” or other words of similar meaning. There are a number of important risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These risks and uncertainties include, among other things, deterioration of or instability in the economy, the markets we serve, international trade policies and the financial markets, contractions or lower growth rates and cyclicality of markets we serve, competition, changes in industry standards and governmental regulations that may adversely impact demand for our products or our costs, our ability to successfully identify, consummate, integrate and realize the anticipated value of appropriate acquisitions and successfully complete divestitures and other dispositions, our ability to develop and successfully market new products, software, and services and expand into new markets, the potential for improper conduct by our employees, agents or business partners, impact of divestitures, contingent liabilities relating to acquisitions and divestitures, impact of changes to tax laws, our compliance with applicable laws and regulations and changes in applicable laws and regulations, risks relating to global economic, political, war or hostility, legal, compliance and business factors, risks relating to potential impairment of goodwill and other intangible assets, currency exchange rates, tax audits and changes in our tax rate and income tax liabilities, the impact of our debt obligations on our operations, litigation and other contingent liabilities including intellectual property and environmental, health and safety matters, our ability to adequately protect our intellectual property rights, risks relating to product, service or software defects, product liability and recalls, risks relating to product manufacturing, our relationships with and the performance of our channel partners, commodity costs and surcharges, our ability to adjust purchases and manufacturing capacity to reflect market conditions, reliance on sole sources of supply, security breaches or other disruptions of our information technology systems, adverse effects of restructuring activities, impact of changes to U.S. GAAP, labor matters, and disruptions relating to man-made and natural disasters. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our Form 10-K for the year ended December 31, 2023. These forward-looking statements represent Vontier’s beliefs and assumptions only as of the date of this release and Vontier does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions) (unaudited)
	June 28, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	331.3			$	340.9
Accounts receivable, net		496.8				497.5
Inventories		323.1				296.6
Prepaid expenses and other current assets		141.4				141.4
Current assets held for sale		—				56.1
Total current assets		1,292.6				1,332.5
Property, plant and equipment, net		115.9				102.3
Operating lease right-of-use assets		45.7				47.0
Long-term financing receivables, net		287.2				276.2
Other intangible assets, net		526.5				568.3
Goodwill		1,728.9				1,742.4
Other assets		239.1				225.3
Total assets	$	4,235.9			$	4,294.0
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	5.9			$	106.6
Trade accounts payable		367.7				366.8
Current operating lease liabilities		14.7				14.0
Accrued expenses and other current liabilities		378.3				435.8
Current liabilities held for sale		—				32.1
Total current liabilities		766.6				955.3
Long-term operating lease liabilities		36.9				37.1
Long-term debt		2,190.4				2,189.0
Other long-term liabilities		217.7				217.0
Total liabilities		3,211.6				3,398.4
Commitments and Contingencies
Equity:
Preferred stock		—				—
Common stock		—				—
Treasury stock		(463.8	)			(403.4	)
Additional paid-in capital		70.6				56.8
Retained earnings		1,331.3				1,132.1
Accumulated other comprehensive income		78.0				104.9
Total Vontier stockholders’ equity		1,016.1				890.4
Noncontrolling interests		8.2				5.2
Total equity		1,024.3				895.6
Total liabilities and equity	$	4,235.9			$	4,294.0

VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (in millions, except per share amounts) (unaudited)
	Three Months Ended								Six Months Ended
	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Sales	$	696.4			$	764.4			$	1,452.2			$	1,540.8
Operating costs and expenses:
Cost of sales, excluding amortization of acquisition-related intangible assets		(360.9	)			(416.3	)			(744.7	)			(839.7	)
Selling, general and administrative expenses		(156.3	)			(166.9	)			(321.7	)			(324.4	)
Research and development expenses		(45.1	)			(40.3	)			(89.6	)			(81.3	)
Amortization of acquisition-related intangible assets		(20.0	)			(20.3	)			(40.0	)			(41.0	)
Operating profit		114.1				120.6				256.2				254.4
Non-operating income (expense), net:
Interest expense, net		(18.4	)			(23.9	)			(37.3	)			(47.9	)
(Loss) gain on sale of business		(2.6	)			34.1				37.2				34.1
Other non-operating expense, net		(1.1	)			(0.5	)			(1.3	)			(1.4	)
Earnings before income taxes		92.0				130.3				254.8				239.2
Provision for income taxes		(21.9	)			(33.0	)			(47.9	)			(59.1	)
Net earnings	$	70.1			$	97.3			$	206.9			$	180.1
Net earnings per share:
Basic	$	0.45			$	0.63			$	1.34			$	1.16
Diluted	$	0.45			$	0.62			$	1.33			$	1.15
Weighted average shares outstanding:
Basic		154.4				155.4				154.4				155.5
Diluted		155.5				156.3				155.5				156.2

VONTIER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)
	Six Months Ended
	June 28, 2024				June 30, 2023
Cash flows from operating activities:
Net earnings	$	206.9			$	180.1
Non-cash items:
Depreciation expense		22.5				21.7
Amortization of acquisition-related intangible assets		40.0				41.0
Stock-based compensation expense		17.4				15.3
Gain on sale of business		(37.2	)			(34.1	)
Change in deferred income taxes		(9.2	)			(9.3	)
Other non-cash items		4.1				1.3
Change in accounts receivable and long-term financing receivables, net		(15.5	)			11.5
Change in other operating assets and liabilities		(91.4	)			(69.0	)
Net cash provided by operating activities		137.6				158.5
Cash flows from investing activities:
Proceeds from sale of business, net of cash provided		68.4				106.8
Payments for additions to property, plant and equipment		(44.0	)			(26.1	)
Proceeds from sale of property, plant and equipment		1.0				4.3
Cash paid for equity investments		(1.5	)			(1.9	)
Proceeds from sale of equity securities		—				20.4
Net cash provided by investing activities		23.9				103.5
Cash flows from financing activities:
Repayment of long-term debt		(100.0	)			(165.0	)
Net (repayments of) proceeds from short-term borrowings		(1.1	)			3.8
Payments of common stock cash dividend		(7.7	)			(7.8	)
Purchases of treasury stock		(59.7	)			(50.0	)
Proceeds from stock option exercises		13.7				3.1
Other financing activities		(12.7	)			(6.7	)
Net cash used in financing activities		(167.5	)			(222.6	)
Effect of exchange rate changes on cash and cash equivalents		(3.6	)			0.1
Net change in cash and cash equivalents		(9.6	)			39.5
Beginning balance of cash and cash equivalents		340.9				204.5
Ending balance of cash and cash equivalents	$	331.3			$	244.0

VONTIER CORPORATION AND SUBSIDIARIES SEGMENT FINANCIAL SUMMARY (in millions) (unaudited)
	Three Months Ended								Six Months Ended
	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Sales
Mobility Technologies	$	237.6			$	238.8			$	480.3			$	484.7
Repair Solutions		150.8				158.4				333.2				339.8
Environmental & Fueling Solutions		311.2				339.3				642.2				653.1
Other		—				27.9				1.3				63.2
Intersegment eliminations		(3.2	)			—				(4.8	)			—
Total Vontier Sales	$	696.4			$	764.4			$	1,452.2			$	1,540.8
Segment & Adjusted Operating Profit
Mobility Technologies	$	41.2			$	44.7			$	88.8			$	92.6
Repair Solutions		32.1				41.6				76.8				88.9
Environmental & Fueling Solutions		89.3				95.2				186.6				175.9
Other		—				2.2				(0.4	)			6.0
Segment Operating Profit (Non-GAAP)		162.6				183.7				351.8				363.4
Corporate & Other Unallocated Costs		(21.0	)			(23.6	)			(43.5	)			(42.1	)
Adjusted Operating Profit (Non-GAAP)	$	141.6			$	160.1			$	308.3			$	321.3
Segment & Adjusted Operating Profit Margin
Mobility Technologies		17.3	%			18.7	%			18.5	%			19.1	%
Repair Solutions		21.3	%			26.3	%			23.0	%			26.2	%
Environmental & Fueling Solutions		28.7	%			28.1	%			29.1	%			26.9	%
Other		—	%			7.9	%			(30.8	%)			9.5	%
Segment Operating Profit Margin (Non-GAAP)		23.3	%			24.0	%			24.2	%			23.6	%
Adjusted Operating Profit Margin (Non-GAAP)		20.3	%			20.9	%			21.2	%			20.9	%

VONTIER CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
AND OTHER INFORMATION

Core Sales Growth

We define core sales growth as the change in total sales calculated according to GAAP but excluding (i) sales from acquired and certain divested businesses; (ii) the impact of currency translation; and (iii) certain other items.

• References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales attributable to certain divested or exited businesses or product lines not considered discontinued operations.

• The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales from acquired businesses) and (b) the period-to-period change in sales, including foreign operations, (excluding sales from acquired businesses) after applying the current period foreign exchange rates to the prior year period.

• The portion of sales attributable to other items is calculated as the impact of those items which are not directly correlated to core sales which do not have an impact on the current or comparable period.

Core sales growth should be considered in addition to, and not as a replacement for or superior to, total sales, and may not be comparable to similarly titled measures reported by other companies.

Management believes that reporting the non-GAAP financial measure of core sales growth provides useful information to investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our sales performance with our performance in prior and future periods and to our peers. We exclude the effect of acquisitions and certain divestiture-related items because the nature, size and number of such transactions can vary dramatically from period to period and between us and our peers. We exclude the effect of currency translation and certain other items from core sales because these items are either not under management’s control or relate to items not directly correlated to core sales growth. Management believes the exclusion of these items from core sales growth may facilitate assessment of underlying business trends and may assist in comparisons of long-term performance.

Adjusted Operating Profit and Adjusted Operating Profit Margin

Adjusted operating profit refers to operating profit calculated in accordance with GAAP, but excluding amortization of acquisition-related intangible assets, costs associated with restructurings including one-time termination benefits and related charges and impairment and other charges associated with facility closure, contract termination and other related activities, and the related impact of certain divested or exited businesses or product lines not considered discontinued operations ("Restructuring- and divestiture-related adjustments"), transaction- and deal-related costs, asbestos-related adjustments associated with certain divested businesses, one-time costs related to the separation, amortization of acquisition-related inventory fair value step-up, gains and losses on sale of property, and other charges which represent charges incurred that are not part of our core operating results (“Other charges”). Adjusted operating profit margin refers to adjusted operating profit divided by GAAP sales.

Segment Operating Profit and Segment Operating Profit Margin

Segment operating profit is used by Vontier’s management in determining how to allocate resources and assess performance. Segment operating profit represents total segment sales less operating costs attributable to the segment, which does not include unallocated corporate costs and other operating costs not allocated to the reportable segments as part of management’s assessment of reportable segment operating performance, including stock-based compensation expense, amortization of acquisition-related intangible assets and other costs shown in the reconciliation to GAAP operating profit below. As part of management’s assessment of the Repair Solutions segment, a capital charge based on the segment’s financing receivables portfolio is assessed by Corporate. Segment operating profit margin refers to segment operating profit divided by GAAP sales.

Adjusted Net Earnings and Adjusted Diluted Net Earnings per Share

Adjusted net earnings refers to net earnings calculated in accordance with GAAP, but excluding on a pretax basis amortization of acquisition-related intangible assets, Restructuring- and divestiture-related adjustments, transaction- and deal-related costs, asbestos-related adjustments associated with certain divested businesses, one-time costs related to the separation, amortization of acquisition-related inventory fair value step-up, gains and losses on sale of property, Other charges, non-cash write-offs of deferred financing costs, gains and losses on sale of businesses and gains and losses on investments, including the tax effect of these adjustments and other tax adjustments. The tax effect of such adjustments was calculated by applying our estimated adjusted effective tax rate to the pretax amount of each adjustment. Adjusted diluted net earnings per share refers to adjusted net earnings divided by the weighted average diluted shares outstanding.

Free Cash Flow, Adjusted Free Cash Flow and Adjusted Free Cash Flow Conversion

Free cash flow refers to cash flow from operations calculated according to GAAP but excluding capital expenditures. Adjusted free cash flow refers to free cash flow adjusted for cash received from the sale of property and cash paid for Restructuring- and divestiture-related adjustments, transaction- and deal-related costs and Other charges. Adjusted free cash flow conversion refers to adjusted free cash flow divided by adjusted net earnings.

Net Leverage Ratio, EBITDA and Adjusted EBITDA

EBITDA refers to net earnings calculated in accordance with GAAP, excluding interest, taxes, depreciation and amortization of acquisition-related intangible assets. Adjusted EBITDA refers to EBITDA adjusted for Restructuring- and divestiture-related adjustments, transaction- and deal-related costs, asbestos-related adjustments associated with certain divested businesses, one-time costs related to the separation, amortization of acquisition-related inventory fair value step-up, gains and losses on sale of property, Other charges, non-cash write-offs of deferred financing costs, gains and losses on sale of businesses and gains and losses on investments. Net leverage ratio refers to net debt divided by Adjusted EBITDA.

Management believes that these non-GAAP financial measures provide useful information to investors by reflecting additional ways of viewing aspects of our operations that, when reconciled to the corresponding GAAP measure, help our investors to understand the long-term profitability trends of our business, and facilitate comparisons of our profitability to prior and future periods and to our peers.

These non-GAAP measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies.

A reconciliation of each of the projected Core Sales Growth, Adjusted Operating Profit Margin, Adjusted Diluted Net Earnings Per Share and Adjusted Free Cash Flow Conversion, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measure, is not provided because the company is unable to provide such reconciliation without unreasonable effort. The inability to provide each reconciliation is due to the unpredictability of the amounts and timing of events affecting the items we exclude from the non-GAAP measure.

Components of Sales Growth

	% Change Three Months Ended June 28, 2024 vs. Comparable 2023 Period
	Mobility Technologies		Repair Solutions		Environmental & Fueling Solutions		Total
Total Sales Growth (GAAP)	(0.5)%		(4.8)%		(8.3)%		(8.9)%
Core sales growth (Non-GAAP)	1.0%		(4.8)%		(5.0)%		(3.2)%
Acquisitions and divestitures (Non-GAAP)	—%		—%		(2.5)%		(4.8)%
Currency exchange rates (Non-GAAP)	(1.5)%		—%		(0.8)%		(0.9)%

	% Change Six Months Ended June 28, 2024 vs. Comparable 2023 Period
	Mobility Technologies		Repair Solutions		Environmental & Fueling Solutions		Other Segment		Total
Total Sales Growth (GAAP)	(0.9)%		(1.9)%		(1.7)%		(97.9)%		(5.8)%
Core sales growth (Non-GAAP)	0.7%		(1.9)%		2.0%		—%		0.4%
Acquisitions and divestitures (Non-GAAP)	—%		—%		(3.0)%		(97.9)%		(5.3)%
Currency exchange rates (Non-GAAP)	(1.6)%		—%		(0.7)%		—%		(0.9)%

Reconciliation of Operating Profit to Adjusted Operating Profit and Segment Operating Profit

	Three Months Ended								Six Months Ended
$ in millions	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Operating Profit (GAAP)	$	114.1			$	120.6			$	256.2			$	254.4
Amortization of acquisition-related intangible assets		20.0				20.3				40.0				41.0
Restructuring- and divestiture-related adjustments		3.9				14.3				8.6				18.8
Transaction- and deal-related costs		0.3				3.6				(0.2	)			6.7
Asbestos-related adjustments		3.0				—				3.3				—
One-time costs related to separation		0.3				0.8				0.9				1.9
Amortization of acquisition-related inventory fair value step-up		—				0.5				—				1.3
Gain on sale of property		—				—				(0.5	)			(2.8	)
Adjusted Operating Profit (Non-GAAP)		141.6				160.1				308.3				321.3
Corporate & Other Unallocated Costs		21.0				23.6				43.5				42.1
Segment Operating Profit (Non-GAAP)	$	162.6			$	183.7			$	351.8			$	363.4
Operating Profit Margin (GAAP)		16.4	%			15.8	%			17.6	%			16.5	%
Adjusted Operating Profit Margin (Non-GAAP)		20.3	%			20.9	%			21.2	%			20.9	%
Segment Operating Profit Margin (Non-GAAP)		23.3	%			24.0	%			24.2	%			23.6	%

Reconciliation of Net Earnings to Adjusted Net Earnings

	Three Months Ended								Six Months Ended
($ in millions)	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Net Earnings (GAAP)	$	70.1			$	97.3			$	206.9			$	180.1
Amortization of acquisition-related intangible assets		20.0				20.3				40.0				41.0
Restructuring- and divestiture-related adjustments		3.9				14.3				8.6				18.8
Transaction- and deal-related costs		0.3				3.6				(0.2	)			6.7
Asbestos-related adjustments		3.0				—				3.3				—
One-time costs related to separation		0.3				0.8				0.9				1.9
Amortization of acquisition-related inventory fair value step-up		—				0.5				—				1.3
Gain on sale of property		—				—				(0.5	)			(2.8	)
Non-cash write-off of deferred financing costs		—				0.1				—				0.1
Loss (gain) on sale of business		2.6				(34.1	)			(37.2	)			(34.1	)
Loss on equity investments		0.1				0.1				0.2				0.8
Tax effect of the Non-GAAP adjustments and other tax adjustments		(2.7	)			2.5				(8.7	)			(2.3	)
Adjusted Net Earnings (Non-GAAP)	$	97.6			$	105.4			$	213.3			$	211.5
Diluted weighted average shares outstanding		155.5				156.3				155.5				156.2
Diluted Net Earnings Per Share (GAAP)	$	0.45			$	0.62			$	1.33			$	1.15
Adjusted Diluted Net Earnings Per Share (Non-GAAP)	$	0.63			$	0.67			$	1.37			$	1.35

Reconciliation of Operating Cash Flow to Free Cash Flow, Adjusted Free Cash Flow, and Adjusted Free Cash Flow Conversion

	Three Months Ended								Six Months Ended
($ in millions)	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Operating Cash Flow (GAAP)	$	46.1			$	77.5			$	137.6			$	158.5
Less: Purchases of property, plant & equipment (capital expenditures)		(23.8	)			(12.4	)			(44.0	)			(26.1	)
Free Cash Flow (Non-GAAP)	$	22.3			$	65.1			$	93.6			$	132.4
Restructuring- and divestiture-related adjustments		1.9				5.4				5.7				9.5
Transaction- and deal-related costs		1.6				6.2				3.8				8.5
Proceeds from sale of property, plant and equipment		0.1				0.1				1.0				4.3
Adjusted Free Cash Flow (Non-GAAP)	$	25.9			$	76.8			$	104.1			$	154.7
Adjusted Net Earnings (Non-GAAP)	$	97.6			$	105.4			$	213.3			$	211.5
Adjusted Free Cash Flow Conversion (Non-GAAP)		26.5	%			72.9	%			48.8	%			73.1	%

Net Leverage Ratio and Reconciliation from Net Earnings to EBITDA to Adjusted EBITDA

Total Debt	$	2,205.9
Less: Cash		(331.3	)
Net Debt	$	1,874.6
Adjusted EBITDA (Non-GAAP)	$	696.0
Net Leverage Ratio		2.7

		Three Months Ended			LTM
($ in millions)		June 28, 2024			June 28, 2024
Net Earnings (GAAP)		$	70.1		$	403.7
Interest expense, net			18.4			83.1
Income tax expense			21.9			95.4
Depreciation and amortization expense			31.1			124.8
EBITDA (Non-GAAP)		$	141.5		$	707.0
Restructuring- and divestiture-related adjustments			3.9			15.8
Transaction- and deal-related costs			0.3			5.1
Asbestos-related adjustments			3.0			3.3
One-time costs related to separation			0.3			2.2
Gain on sale of property			—			(0.5	)
Non-cash write-off of deferred financing costs			—			0.1
Loss (gain) on sale of business			2.6			(37.5	)
Loss on equity investments			0.1			0.5
Adjusted EBITDA (Non-GAAP)		$	151.7		$	696.0

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801244881/en/

INVESTOR RELATIONS:

Ryan Edelman

Vice President, Investor Relations

+1 (984) 238-1929

ryan.edelman@vontier.com

MEDIA:

Nicole Beck

Vontier Corporation

nicole.beck@vontier.com

Source: Vontier Corporation

FAQ

What were Vontier's (VNT) Q2 2024 earnings results?

Vontier reported Q2 2024 sales of $696.4 million, down 9% year-over-year. GAAP diluted net EPS was $0.45, and adjusted diluted net EPS was $0.63.

How did Vontier's (VNT) segments perform in Q2 2024?

Environmental & Fueling Solutions reported an 8% sales decline, Mobility Technologies saw a 1% decline, and Repair Solutions experienced a 5% decrease in sales.

What is Vontier's (VNT) updated outlook for 2024?

Vontier lowered its 2024 outlook, projecting total sales of $2,900 to $3,000 million, core sales growth of -1% to +3%, and adjusted diluted net EPS of $2.80 to $3.00.

What capital allocation actions did Vontier (VNT) take in Q2 2024?

Vontier repurchased ~$38 million in shares, repaid $50 million in debt, and announced plans for an Accelerated Share Repurchase Plan.